Pfizer's Big Problem: Lipitor Patent Expiration

NOVEMBER 14, 2011

How do you replace the sales of one of the most successful branded prescription products ever developed after it loses patent protection? What strategies do you implement to try and prevent the plummeting sales that inevitably come when other companies are allowed to market and sell your blockbuster product? Those are just a few of the questions haunting Pfizer executives right now.

The granddaddy of all prescription drugs, Lipitor (atorvastatin), is scheduled to lose its patent protection at the end of this month. That means other manufacturers will soon be able to market generic alternatives for patients. And for Pfizer, the maker of this hugely successful cholesterol-lowering drug, this holiday season will be the beginning of the end for their big seller. But will this big patent expiration turn into lower co-pays for patients this holiday season?

It’s not every month that a $5 billion dollar a year drug loses its patent protection. That isn’t a typo—sales of Lipitor topped $5 billion dollars in 2010 alone. And for Pfizer, the maker of the powerful cholesterol drug, this month was marked on their calendars for years. This is a critical time for them. Lipitor has helped pad Pfizer’s earnings numbers for years. So what will the company do now to try and limit the impact of generic competition for Lipitor?

Well, it isn’t like they didn’t see this problem coming. Pfizer has been working for years to attempt to come up with a suitable replacement for their big money maker. Plan A was a good one for Pfizer: find a heavyweight contender to replace Lipitor and then substitute out one monster earnings-producing prescription medication for another. And it would work too, except for one little problem. Pfizer can’t exactly find that replacement medication.

They had high hopes for a drug called torcetrapib which was a novel new drug that was a cholesteryl-ester-transfer-protein (CETP) inhibitor. That new drug and its entirely new class of cholesterol fighting medications was Pfizer’s hope for a replacement for Lipitor. There were even possibilities of a combination medication with Lipitor not unlike the combination drug Vytorin (ezetimibe/simvastatin) for cholesterol.

But Pfizer had to stop clinical trials on torcetrapib 5 years ago because of safety concerns after dumping more than three quarters of a billion dollars into its development. The company’s hope for a viable replacement blockbuster cholesterol medication then vanished. But that was just one strategy for the company to limit the damage of losing such a big drug to generic competition. They have other options as well.

So what’s next if a suitable replacement drug isn’t available? How about making deals with pharmacy benefit managers (PBMs) to offer them discounts to encourage patients to continue to have prescriptions for Lipitor filled for the brand name even after the patent expires? That might stop or at least slow the decline in sales for a while.

Well, according to a New York Times article, Pfizer is actively pursuing deals with PBMs like Medco Health Solutions and Catalyst Rx to try and prevent patients from switching to the lower cost generic versions of the medication after the patent expires. The idea would be to give PBMs discounts on the brand name product for at least 6 months in return for more favorable formulary placement and lower co-pays after the generics hit the market. Those deals may actually create a situation whether a customer’s co-pay could be higher for the generic versions verses the brand name product.

But Pfizer has other options even if the PBMs weren’t willing to make a deal. Co-pay cards are another common practice that are already being ramped up ahead of the patent expiration to try and entice patients to stay with the brand name product. These cards are given to patients and are used as a secondary insurance to lower the out-of-pocket cost for the consumer. If the brand name co-pay for Lipitor is $40 and the generic co-pay is $15 for the newly released atorvastatin generics, then Pfizer could simply issue co-pay cards for patients to make up the difference in co-pays. The idea is to eliminate any financial advantage patients may have to switch away from the branded Lipitor product.

But Pfizer has other less obvious answers to the big “what do we do now” question to prevent the decreasing sales of Lipitor. Another option being floated around the company is to try and develop an OTC version of Lipitor. According to a Bloomberg report earlier this month, Pfizer is exploring the option of marketing Lipitor as an OTC product. If that were to happen, Lipitor would be the first of its class of cholesterol lowering medications to ever make the successful transition to OTC status. But safety and monitoring concerns that have prevented previous statins from going OTC are also a concern for Lipitor, so this may never happen.

Whatever Pfizer decides to do, expect them to use all of their resources to fight any reduction in Lipitor sales—even after the generics hit the market. We will see their strategies for keeping patients on brand name Lipitor soon enough. But you can bet they will not let their big money maker go down without a fight. And that could mean changes are coming that will affect consumers and the price they pay for their cholesterol medications.

So be on the lookout for one of the biggest drug patent expirations in United States history. But don’t expect Lipitor to gracefully exit stage left. That drug isn’t going down without a fight. Pfizer has their boxing gloves on ready for battle. This could be a long drawn out fight everyone. So stay tuned pharmacists and patients: this fight is expected to go the full 12 rounds!